U.S. MarketFlash | Flexing Their Muscles: Flexible Space Provider Leasing Surging

Flexible space providers¹  account for a small but rapidly growing share of major office leasing²  activity. Flexible space providers accounted for 4.4% of square footage leased in major deals in H1 2018, nearly double their share in H1 2017 and up from less than 1% in 2013. If a similar rate of growth continues, flexible space providers’ share of major leasing will surpass the legal, government and insurance sectors by mid-year 2019.

Flexible space providers have been the primary growth driver within the business services³  sector. One-third of major leases signed by business services firms in H1 2018 were flexible space providers, up from less than 7% five years earlier. Excluding flexible space providers, business services leasing activity has been relatively stable over the past five years.

Figure 1: Flexible Space Providers vs. Traditional Business Services Share of Major Leasing Activity

_{Source: CBRE Research, Q2 2018.
Note: Includes the 25 largest transactions by sq. ft. each quarter for each of the 54 markets tracked by CBRE Research.}

Figure 2: Major Office Leasing Activity by Industry

_{Source: CBRE Research, Q2 2018.
Note: Includes the 25 largest transactions by sq. ft. each quarter for each of the 54 markets tracked by CBRE Research.}

¹A flexible space provider operates office facilities that can be transacted to third-party occupants on flexible terms.

²Includes the 25 largest transactions by sq. ft. each quarter for each of the 54 markets tracked by CBRE Research.

³Business services includes flexible space providers as well as accounting, consulting, employment services and real estate firms.